18 | International Union Rights | 24/4 REPORT | BUSINESS AND HUMAN RIGHTS – RANA PLAZA LITIGATION Vacuousness of CSR on Display in Loblaws’ Victory in Rana Plaza Class Action Lawsuit An important and interesting class action lawsuit arising from the infamous Rana Plaza collapse was dismissed this past September by a Canadian court. Justice Paul Perell of the Ontario Superior Court dismissed the $2 billion class action lawsuit filed against Canadian retailers Loblaws and Joe Fresh by victims of the building collapse in Bangladesh that killed 1,130 people in 2013. Although the corporations won their motions to dismiss the lawsuit, the decision does not paint a positive picture of the project of CSR generally or the ethical sourcing processes at Loblaws/Joe Fresh in particular. Loblaws argued that it had no obligation to take steps to protect the workers, let alone to check if the buildings where its products are made are likely to fall down. While it was entitled to monitor supplier factories, Loblaws argued that it had no obligation to do so. Even when violations of Bangladeshi law and Loblaws’ own supplier code of conduct were identified prior to the collapse of Rana Plaza, Loblaws took no steps to ensure compliance. Serious violations of health and safety laws were ignored. Rana Plaza was built on a drained pond, without proper approvals, and the building was never approved for apparel production. Loblaws was aware that its Joe Fresh products were being produced on storeys added onto the original building, in a country where regulatory oversight is notoriously poor and where there had already been horrific factory collapses and deadly fires due to poor construction and maintenance. Yet Loblaws did not check that engineers had approved the building. For a couple of thousand dollars, Loblaws could have retained an auditor to check the structural integrity of the building, but it opted instead to select the cheaper basic ‘social audit’ that specifically instructed the auditor to not look beyond the minimal requirements in the Loblaws supplier code, which focused on employment-related rules. The Basic Facts On April 24, 2013, the Rana Plaza building in Savar, Bangladesh collapsed, killing 1,130 people and injuring thousands more. On the day before the collapse, cracks had been seen in the building and engineers ordered the building evacuated. The next day, the building owner said (falsely) that the building had been ruled safe and apparel workers were ordered back to work by their employers. Loblaws had sourced its Joe Fresh apparel line from Bangladesh since 2006 because the workers there are among the lowest paid in the world, earning between 25 and 33 cents per hour. Some of the workers producing Joe Fresh goods were children, mostly young girls, below the age of 18. Between 2007-2013, Loblaws imported over 13 million garments from 73 Bangladeshi factories. A major Loblaws’ supplier in Bangladesh was Pearl Global, which subcontracted the work, with Loblaws’ knowledge and consent, to an operation called New Wave which operated out of Rana Plaza. Annual orders from New Wave amounted to about $6 million in business. A large portion of the people killed or injured at Rana Plaza were New Wave employees, many of whom were working on Joe Fresh products when they died. About 50 percent of New Wave’s orders were from Loblaws in 2013. The supplier contract between Pearl Global and Loblaws required that goods be produced in compliance with Loblaws’ CSR standards and all legal requirements and permitted Loblaws to conduct on-site compliance inspections, although there was no obligation on Loblaws to actually conduct those inspections or to remedy any violations. Although the contract permitted Pearl to subcontract the work, it did not require subcontractors to become parties to the supplier agreement and therefore Loblaws retained no direct control over subcontractors and nor were subcontractors required to comply with Loblaw’s CSR standards. In fact, one of Loblaws’ central arguments in the case was that it had no control at all over the subcontractors retained to make their goods beyond the possibility of cutting orders, which in New Waves’ case did not happen. In 2011, Loblaws retained the giant social auditing company Bureau Veritas (BV) to conduct...
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Aug 26, 2019
Sungkwol Park + 3
Open Access
